市場新聞與洞察

One of the must-watch economic events this week will be the Bank of Canada interest rate decision. The decision is scheduled to be announced on Wednesday 29th May at 15:00 PM London time. Why Is The Announcement Important?

A bank interest rate is a rate at which a countries central bank lends money to local banks. The interest rate is charged by nations central or federal bank on loans advances to control the money supply in the economy and the banking sector. The Bank of Canada has an inflation target of 1% to 2% (currently 2%), and the interest rates are changed accordingly to meet the target.

Therefore, the Bank of Canada’s and other central bank rate decisions can have a significant impact on the financial markets. Expectations The last time the Bank of Canada raised its key interest rates was back in October of last year and it is expected that the rates will remain unchanged at 1.75%, according to the analysts. ''Recent economic data suggest that growth will be stronger than the Bank was expecting in the first quarter, providing a reason to not cut rates.'' ''At the same time, growth will remain below potential, providing no reason to lift rates. The Bank of Canada will, therefore, remain in a holding pattern for now and make any necessary adjustments to that stance based on incoming economic data'', Principal economist Alicia MacDonald said at the Conference Board of Canada last week.

Even though a rate decision is not expected, traders will be keeping a close eye to the upcoming meeting and the comments after the rate decision has been announced. To keep up to date with other upcoming economic events click here for our Economic Calendar. This article is written by a GO Markets Analyst and is based on their independent analysis.

They remain fully responsible for the views expressed as well as any remaining error or omissions. Trading Forex and Derivatives carries a high level of risk. Sources: DataWrapper, Bank of Canada

On Monday, UK Chancellor Phillip Hammond announced its latest budget, which did not have a massive impact on Pound Sterling. Now that is out of the way; it’s time to focus on another critical economic event – the Bank of England rate decision. The decision is set to be announced at 12:00 PM London time on Thursday.

About Interest Rates Interest rates are set by the Bank of England’s Monetary Policy Committee which is made of nine members – The Governor, the three Deputy Governors for Monetary Policy, Financial Stability and Markets & Banking, the Banks' Chief Economist and four external members appointed directly by the Chancellor. Bank of England has an inflation target of 2% (currently 2.4%), which is set by the Government and the Bank of England’s monetary policy is set to achieve the Government’s target. If the Consumer Price Index (CPI) inflation rate is more than 3% or less 1%, the Governor must write a letter to the Chancellor to explain why and outline how they will get the inflation to the target of 2%.

Expectations We have seen two rate hikes from the Bank of England in the last year, one in November 2017 and August of this year. The current interest rate stands at 0.75%, and according to the latest forecast, we will not see the Bank of England raising the rates in its upcoming meeting. After the announcement, all eyes will be on the Bank of England’s Governor Mark Carney press conference with his latest outlook on the British economy and Brexit.

The Governor recently mentioned that a limited and gradual series of interest rate hikes are required to keep the inflation in check. The markets are expecting a potential hike in May 2019, after the United Kingdom formally leaves the European Union. Other UK data to keep an eye on: • Bank of England Asset Purchase Rate (12:00 London time) Previous: £435 billion Forecast: £435 billion • Bank of England Inflation Report (12:00 London time) This article is written by a GO Markets Analyst and is based on their independent analysis.

They remain fully responsible for the views expressed as well as any remaining error or omissions. Trading Forex and Derivatives carries a high level of risk. Sources: Go Markets MT4, Google, Datawrapper

One of the must-watch economic events this week will be the Bank of Canada interest rate decision. The rate decision is due to be announced at 15:00 PM London time on Wednesday. Why is the announcement important?

A bank interest rate is a rate at which a country's central bank lends money to local banks. The interest rate is charged by the nation's central or federal bank on loans and advances to control the money supply in the economy and the banking sector. The Bank of Canada has an inflation target of 1% to 3% (currently 1%).

The interest rates are changed accordingly to meet the target. The decision to increase, decrease, or maintain the interest rate has a significant impact on the financial markets so it is one of the most closely watched economic events in the calendar. Bank of Canada interest rate changes since 2015 Expectations All eyes will be on the Bank of Canada governor, Tiff Macklem on whether the interest rate remains unchanged at 0.25% or reduced closer to 0%.

Canada has had one of the strictest lockdown measures in the world in its fight to defeat the Coronavirus in recent months, which has had a considerable impact on the country’s economy. Despite that, the rates are expected to remain unchanged, according to economists. Brett House, vice-president, and deputy chief economist at Scotiabank: ''We do not expect a rate cut from the Bank of Canada at its next meeting as rate-sensitive sectors don’t need an additional boost.

For instance, Governor Macklem noted before the holidays that we should watch how housing is faring... Canadian home sales were up 7.2 per cent month-over-month in December to set a record for the month, which completed an annual gain of 12.6 per cent year-over-year. In other areas, retail sales have been above year-ago levels for several months.'' ''Although some immediate risks to the economy have gone up with intensified restrictions to stem the spread of COVID-19, medium-term risks relevant for setting monetary policy have abated.

Vaccines are being delivered about a year ahead of the Bank of Canada’s earlier expectations; the U.S. stimulus and funding bill passed and a government shutdown was averted, which will provide some positive spillover effects into Canada; and financial conditions remain favourable to growth.'' The Monetary Policy Report is set to be released shortly after the rate decision.

Position sizing is simply the number of contracts that you choose to enter for any specific trade. It is this, combined with the movement in price (either positively or negatively) from entry to exit in your trade, that determines your final dollar result for any specific trade. As this result impacts on your trading capital, position sizing, along with appropriate exit decisions and actions, are THE two key factors in both risk management and taking profit.

It is good trading practice to have a “tolerable risk level”, i.e. what you are prepared to lose on a single trade. This, as we have covered in First Steps, is usually expressed as a percentage of your total trading capital (somewhere between 1-4% are commonly used). For example, If your chosen risk level is 3% and the capital in your account is $5000, this means that you would be prepared to risk $150 on one trade.

Why use formal position sizing? A formal position sizing system aims to answer the question “how many lots do I enter to keep any loss within my tolerable risk level if my stop loss is triggered?”. As we enter a trade, we ALL position size, but we have a choice as to how we action this.

We can: Guess. Use a dollar level i.e. when it hits this we are out (you can retrospectively modify a stop level on a trade chart on your trading platform). Use a technical level as a stop loss and work out how many contracts we can enter based on the Pip movement between entry and stop.

Logically, “3” would seem the most robust AND this should be calculated BEFORE entering a trade. So how do I position size? Accepting that the third of the options above is theoretically the optimum method, the process is: a.

What is my “tolerable risk level” in dollar terms? b. What is the desired technical entry and stop loss price levels? c. What is the dollar difference between entry and stop loss exit? d.

Divide ”a” (your tolerable risk level) by “c” to get an estimated position size. If your account is in Australian dollars the calculation is easier than trading either many index CFDs (except for the ASX200) or Forex as there is no need to add a further calculation to convert a profit/loss back into your account currency. Other position sizing issues to consider: Position sizing can only make a difference to your risk management if you adhere to your pre-planned exit strategy.

Be aware of gapping on market open from previous close price. This is at its potentially most severe subsequent to a company’s earnings report release and so you may want to consider avoiding this situation as part of your risk management plan. Once you have mastered basic position sizing, consider whether different market conditions or situations would merit a different tolerable risk level on which to base your position sizing calculations. e.g. a major economic news release increased general market volatility.

In such situations it may be that you enter a smaller position initially and then accumulate into the position if it goes in your desired direction. There is a FREE DOWNLOAD of an excel-based “indicative CFD position size calculator” you are welcome to use to assist you in this important part of trading entry. Feel free to use, but please pay attention to the notes.

Click on the link below. CFD position size calculator v2 Please feel free to connect with the team with any questions you have about share CFDs and how you can add this to your trading.

M any traders utilise options amongst their investment strategies either for income or capital growth. As with Forex and CFD trading, options offer an opportunity to get into a leveraged position giving exposure to the movement of an underlying instrument. One of the key factors that options traders may consider in their choice of specific markets to trade is liquidity, with a higher trading volume impacting positively on the ability to get in and out of trades at a fair price.For the options trader therefore, the breadth of choice and liquidity of US based options, make this market the preferred market to trade.

Like any type of trading, sustainable results require a depth of knowledge and commitment to trading an individual tried and tested system. This system should include in depth reference to risk management throughout. However, due to the market of choice, a trader can make regular profit and yet lose this (and potentially more) through the currency risks associated with trading in US dollars rather than, for example, their base currency of Australian dollars or GB pounds.

Although directional options traders usually choose to invest relatively small amounts with perhaps a few thousands, if trading US covered calls when options are sold over a portfolio of bought shares the investment can be substantial, often into a tens of thousands investment. So what is the risk? The reality is that profits can be 'used up', or losses can be compounded, by adverse currency movements.

The reason for this is simple. Let’s assume that your currency is AUD and it is transferred into USD for trading purposes. The exchange value when converted back to the original currency at some time in the future will be dependent not only on trading results but on the movement of AUD versus USD.

While your money is in your account in USD, weakness in AUD will mean a greater worth in AUD when converted back, whereas a lesser conversion worth will result if there is AUD strength while your money is sitting is USD. Let's give an example See below a weekly chart of AUD/USD. Note the price from the end of January 2018 at a level of 0.8134.

The price at March 20th 2019 was at 0.7100. So, an investment to fund a trading account of AUD$10,000 would have equalled an original USD value of $8134. With the movement over this period the value of the account when transferred back into AUD would have risen to $11468.98 or in other words a 14.67% increase.

So, in this case the underlying currency movements was of benefit. However, if this is the case when there is USD strength (when your money is in USD), with the same AUDUSD currency movement in the other direction, the loss could be 14.67%. This would mean that you would have had to profit by this 14.67% in your trades simply to breakeven (looking at the same chart this is the movement from the beginning of Jan 2016 to Aug 2017).

More than this of course, if you have lost $1468 on a similar price move in the other direction, broke even on your trades during that period so your equivalent AUD value is $8532 your trading return would have to be now 17% profit to recover the original capital. Just to reinforce a previous point, bear in mind of course we have chosen only a $10,000 example, some of you who are trading strategies such as 'Covered Calls' may have considerably more than this in the market (and so considerably more currency risk) than the example we have given. So what can you do?

So, your choices are twofold. Allow your invested trading capital to be subjected to the risks associated with underlying currency movements or, Hedge the currency risks with a non-expiring, low cost Forex position. If option “b” looks attractive, the reality is you can: Remove this risk completely through opening a very small leveraged forex trade (so akin to an insurance policy or a non-expiring put option) Attempt to optimise your hedge by timing its placement and exit i.e. use technical landmarks, to decide when to get in and out of a hedge.

Learn how to reduce the risk We are happy not only to show you how but guide you step by step in how to set this up. There are a couple of practical issues you would need to have in place to manage this well but again we can go through these to enable you to make the right decision for you. We have a webinar session planned that aims to offer you the information you need to look at removing currency risk in your options trading which you would be very welcome to attend.

To access this free training session on 3rd June go to https://attendee.gotowebinar.com/register/6726730073741725196 This session will give you learning relating to: Explore the advantages of hedging against currency risk and potential risks of not doing so. Offer a step by step guide of to how to work out the amount and process of placing a currency “hedge”. Demonstrate how to action this, and where to get any support you need to make it happen.

Discuss advanced approaches to utilising this in your trading including “timing your hedge”. Either way, we trust that this article has been of interest and welcome any comments.

On the back of what has been a pretty punishing month for Oil, now trading below $70 a barrel for WTI crude, we’re going to take a look at Oil, the fundamental drivers behind the price swings and what the future could hold for the Oil markets. For the sake of clarity, this article will be looking exclusively at WTI Crude. So what drove the close to 11% decline in Oil?

What has stalled fund managers and market voices calling for oil to revisit $100 a barrel? Well, mostly it is a confluence of reasons, some rooted in basic economics and one fear-based reaction on the back of the “stock market rout” as it has been dubbed. Now although we are going to be focusing on some of the reasons for this decline, these are not specific to this sell-off alone, these are fundamental drivers in the price of Oil markets.

WTI Crude December Contract - October sell of from $76.72 to low of $68.53 One of the reasons for the sell-off is that of a supply jump. U.S. crude stockpiles rose by 22.3 million barrels, which is the most substantial increase since 2015. This factor comes down to basic economics.

With a boost in supply and the more something is readily available; naturally, the associated value will be lower, and this is what is weighing here. However, the story doesn't end there. It can also provide an insight into how the general populous is leaning as an increase in stockpiles means that the current supply level is too much for current demand.

For example, it could potentially be an indicator in sentiment, companies shifting to renewables, and more and more people moving to electric vehicles, etc. All of these factors would impact the appetite for oil which then leads to an oversupply, subsequently causing a tumble in price as we've seen of late. One of the other factors for Crude also stems from this balancing act of supply and demand.

With Crude spiking to highs not long seen, it sparked some fear that the high prices would weigh on demand for the asset, causing investors to be more cautious and to close out long positions. Since then both OPEC and the International Energy Agency have both revised down the oil growth forecasts. WTI December Contract and S&P Overlay - During the "stock rout" The so-called “stock market rout” also took its toll on the Oil price, with investors dumping risk assets and moving into safe-haven assets, i.e., bonds, gold, etc. this helped to perpetuate Crude’s slide and saw it shed a further 5% of its value.

So, with WTI Crude oil currently, at the time or writing sitting at lows of $66.70 a barrel, what lies ahead for Oil? With continued sell-offs seen in equities markets and steadily more risk-off sentiment throughout the market, we could continue to see Oil slide. However, as markets tend to jump between risk-on & risk-off on a daily, sometimes more frequent basis, we can expect to see plenty of activity in the Oil market, and this will undoubtedly be one of our watchlist staples.

For more information or any questions feel free to reach out to me on twitter This article is written by a GO Markets Analyst and is based on their independent analysis. They remain fully responsible for the views expressed as well as any remaining error or omissions. Trading Forex and Derivatives, including Oil Commodity trading, carries a high level of risk.